Greg BolandKourosh Keshiri
Greg Boland finished 2015 by leading a group of shareholders in a deal to sell Wind Mobile to Shaw Communications for $1.6-billion. That's hardly his first windfall – as head of West Face Capital, he has become one of Bay Street's shrewdest hedge fund managers.
What do your best investments have in common?
Our most successful ones have been large, concentrated investments in companies that have fallen on hard times for reasons that are maybe misunderstood by the broad market and where there is a reasonable amount of complexity. Maple Leaf Foods, Hudson's Bay, Stelco, UTS Energy—these were great companies that had very valuable assets but a great amount of investor pessimism.
How has your investment process evolved?
Being a contrarian and buying at the nadir of investor confidence has always appealed to me psychologically, I don't know why. The result is you often get some bumpy rides at the beginning. If you're trying to catch a falling knife, you can get a few nicks on the way down.
For the retail investor with a contrarian streak, where might you direct them?
If the energy sector generates a lot of restructured companies, post-restructuring equities are often pretty interesting—they've already cleansed their balance sheets, they've solved their problems, their enterprise values are compressed. But what generally happens with individual investors is that when you get through a period of distress, you're so beaten up that you're less likely to play offence.
Are investors too easily sold on trendy investments?
The types of investments that can be turned into narratives are very appealing. And when that narrative breaks down, and it becomes a complicated investment, it tends to get orphaned by the marginal investor. That can be when it gets most interesting—when the story can't be explained in an elevator pitch. We can spend hundreds of hours going through all the scenarios, but that's extremely labour-intensive. Unless you're doing an incredible amount of your own work, trying to pick stocks is really tough and probably prone to random results.
Are you influenced by any famous investing figures?
Most of the famous deep-value investors—the Warren Buffetts and Seth Klarmans. But you have to find your own way. You have to do something others aren't doing. One of the few ways you can get an edge is to get involved in a contrarian situation, do a lot of work and really understand the outcomes.
What was one of your worst investments?
With Connacher Oil and Gas, we invested at the tail end of an M&A cycle. We didn't have a large investment in it, but we lost 100% of our capital. We didn't anticipate the world changing as quickly as it did. It's a lesson you learn over and over again—how to quantify the worst-case scenario. In that case, we misquantified it.
Tim Shufelt